The dark side of transparency

Transparency is generally lauded as a noble, if sometimes elusive, goal for businesses and executives. But two London Business School professors argue it has a dark side we need to be alert to.

"Excessive sharing of information creates problems of information overload and can legitimize endless debate and second-guessing of senior executive decisions. High levels of visibility can reduce creativity as people fear the watchful eye of their superiors. And the open sharing of information on individual performance and pay levels, often invoked as a way of promoting trust and collective responsibility, can backfire," Julian Birkinshaw and Dan Cable write in The McKinsey Quarterly.

You need to pay attention to the three areas they cite:

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Day-to-day business operations: In seeking input from more people around us, we hope to benefit from the wisdom of the crowd, but it takes longer for decisions to be made. As well, people weigh in without relevant knowledge or without any responsibility to see things through. They point to one university that sought greater faculty input in course availability, but the professors didn’t understand the tradeoffs in suggested choices. Some companies have also faced frustration when trying to gain greater staff involvement. “Many people do not want to know the full details of how their firm is doing, nor do they want to be held fully responsible for its outputs. Instead, they want to know enough to do their job well and they want to have the right to know more, but for the most part they are happy for someone else to process and manage that information on their behalf,” the professors note. To get the balance right, aim for a match between transparency and responsibility.

Employee efforts and rewards: A number of firms have been experimenting with pay transparency, letting everyone know their colleagues’ remuneration. But that can backfire badly, they say, noting one Canadian firm stumbled trying to make its Christmas bonuses transparent. “A year later, after the bonuses had been calculated and distributed according to the new system, employees acknowledged the increased transparency, but their perceptions of the fairness of the bonuses were significantly worse, and they trusted the employer less. Even those who had received as much or more than the previous year were significantly less satisfied with the fairness of the more transparent system, and trusted the employer less,” they report. The professors found transparency invited a critical and transactional evaluation of the process, rather than the bonus being seen as an unexpected gift. Transparency also highlighted those who received larger bonuses, inspiring jealousy among those who didn’t fare as well. If you opt for pay transparency, Birkinshaw and Cable suggest doing so cautiously and only if you can clearly connect employees’ inputs to the outcomes they achieve.

Creative work: Because creative work is not straightforward – it has what they call “nonlinear detours and dead ends” -- problems can arise with transparency. Indeed, close monitoring of the development process for a creative product is detrimental because the creative person may self-censor some of his or her better ideas, for fear they will be misunderstood or criticized. Indeed, one study found workers in a mobile-phone factory were most productive and creative when they were not being observed, suggesting performance improvements can sometimes be achieved by creating zones of privacy. The Eulogy communications agency found that clients can reject early-stage ideas before there is a chance to develop them fully and don’t understand the process they are observing.

Increasing transparency has value. But Birkinshaw and Cable stress that "smart leaders need to know when to share and when to keep things back. They should also know when to get immersed in the details of a project or activity and when to turn a blind eye. Transparency is vital, but it has a dark side, and it takes real skill to get the balance right."

Values can divide your team

Another widely-lauded notion managers need to be cautious about is focusing your team around values. Consultant Jesse Lyn Stoner notes that conflict can arise in a team if values are not properly clarified. "When team values are not clear, we depend on our personal values to interpret each other's actions and intent," she writes on her blog.

Take the value of integrity. It seems clear. But Stoner offers as an example two teammates who became furious with each other after one had promised the client a proposal by 5 p.m., and instead of extending beyond that time to allow his colleague to finish the final edits of the graphics, sent an earlier version. For one colleague, integrity meant keeping to the promised time; for the other, integrity meant the best possible package.

She recommends that you don't just hand down values like tablets from the mountain. Instead, engage in conversations about those values. Ask yourself: Does everyone understand exactly what they mean? "How do you know? Have you had discussions about what they look like in action?" she asks.

Display the value prominently and make them a part of everyday conversations. Use those values to analyze successes and mistakes. If somebody violates the team's values, have a process in mind to support discussion and resolution.

Following that advice will help your organization's values come to life in a helpful, rather than destructive, manner.

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Beware of these barriers to delegation

Delegation is a wonderful idea, but many of us struggle with it in practice. "Perhaps one of the biggest reasons I see for stalled growth, low morale of teams, and not sustaining momentum has to do with leaders who refuse to delegate. They simply won't. Either they don't know how, they don't see the value or they simply don't want to delegate, but it hurts their team's potential," says leadership blogger Ron Edmondson.

The general standard for bereavement leave is three days, but HR consultant Vadim Liberman says that if somebody in his immediate family died, there is no way he would be able to work, let alone function normally, in that brief time. He says a better model to follow is Facebook’s paid leave policy, announced by chief operating officer Sheryl Sandberg, whose husband died two years ago: 20 days following the death of an immediate family member; 10 days for an extended family member; six weeks to care for a sick relative; and three days to care for a family member with a short-term illness, like a child with the flu.

James Bond can help you with public speaking, according to consultant Nick Morgan. Just as the movies plunged viewers right into the action without credits, skip a preamble and get right to the action.

The Uber advantage – shared by other tech darlings like Amazon – is that investors are willing to cover massive losses over long periods of times, says technology thought leader Nicholas Carr. Meanwhile, the small businesses being disrupted – such as local taxi companies or book shops – don’t have sugar daddies underwriting their existence. “At some point, it starts to smell like a market failure rather than a market success,” he writes on his blog.

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